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How Much Should You Save Today for a Comfortable Retirement in India?
When it comes to retirement, most of us worry about how much we need to save. The retirement calculators throw up very high numbers, making us lose sleep.
Do you know how much to save for retirement in India? What is the amount that you should save every month or every year?
The amount you need to save depends on many factors such as your age, income, expenses, lifestyle, and spending habits.
Retirement planning is the process of evaluating your current financial situation and deciding how much you need to save for retirement. The goal of retirement saving is to provide a regular income stream that will last throughout your retired life.
With a better healthcare and other factors average life expectancy of our population is increasing and you can spend over 30 years in retirement.
Why is retirement planning important?
At old age, your health might not allow you to work. So you need to save and invest money during your active earning years.
In India , we don’t have social security processes and one has to find his own way of living in Retirement years. Of course we have schemes like National Pension Schemes, which can give right support if planned in time and well. As we all know , Pension is no longer provided by employers and Govt as well. Hence the need for sizeable corpus for retirement period.
Medical costs are rising and unfortunately in the twilight years, the chances of health issues are higher. If you don’t plan for your retirement today, medical emergencies can erode your wealth.
How much is good enough for retirement years ?
Inflation is one big factor to be overcome with proper investment. We all know Inflation can seriously erode our money’s worth day after day. We need to tame the bull to win.
Our lifestyle has undergone vast changes. Mobile phones, cars, travel, better clothing needs.. overall increased life style. This leads to higher inflation then what the Govt informs the public.
Let’s look at some calculations now.
Your monthly expense is Rs.50,000 or an annual expense of Rs.6 lacs and your current age is 30. Inflation is 10%.
You expect to retire at 60, hence the years to retirement is 30. Your life expectancy is 85, hence you will spend 25 years in retirement.
You should accumulate at least Rs.30 crores in 30 years for a comfortable retirement.
Using Retirement calculators , we can arrive at the per month saving needed to arrive at the corpus amount . The per month saving works out to Rs 53000.
“You must start to save and invest early, even if it’s just a little at first.”
If you cannot invest Rs.53,000 every month, start with a small amount and increase it gradually. For example, you could start with Rs.15,000 per month and increase by 10% every year.
You need to plan for your retirement when you are young, as time will be on your side. You give yourself a solid chance to accumulate enough corpus.